The Friday Takeaway: Will Bell ring the changes?
Pensions Expert’s Friday Takeaway would like to extend a warm welcome to the new pensions minister, Torsten Bell. Grab yourself a portion of scampi and chips and join us – there's quite a bit for us to fill you in on.
As you’ll notice from the mountain of paperwork in your in-tray, there’s been a rather big consultation that closed this week. The chancellor’s ‘megafunds’ plan seems to have ruffled more than a few feathers, in particular the requirement for a minimum level of assets.
Many of the responses are broadly in support of what the government is trying to achieve, namely increased investment in growth assets and improved outcomes for pension scheme members. However, there is a lot of concern from all corners about how radical the proposals are.
Making pension schemes bigger won’t automatically achieve the government’s goals. Also, mergers are often exceptionally complex and can take years to complete – and there’s very little that policymakers can do to speed up data transfers, administration onboarding and similar issues.
But perhaps before you get too swamped by these responses, it is worth swotting up on what else your predecessors have been working on. The Value for Money, small pot consolidation and collective defined contribution developments all cross over with this consultation to a greater or lesser extent – familiarising yourself with all of these will help understand some of the concerns being raised this week.
It’s understandable that you might want to make an impression on the pensions sector quickly. Given the average tenure of a pensions minister, you’ll be itching to get started. Please remember, though, that this is a truly long-term industry – decisions made now must consider the needs of people who will retire in the decades to come.
On that note, while we understand the urgency of the drive for economic growth, this would be for nothing if we do not act to improve pensions adequacy. There are a number of levers the government can pull on this, some of which will meet with very little resistance – but could make all the difference for generations of people set to retire with defined contribution pensions.
The very best of luck to you Mr Bell – and please help yourself to a free subscription to the Pensions Expert newsletters to celebrate your new role.
Oh, and one more thing: please don’t touch the tax system. Please. It’s for the best.
Enjoy your weekend.
Story of the Week: Systemic risk building in pension insurance sector, PRA warns
The Prudential Regulatory Authority (PRA), the regulator for insurance companies and banks, this week highlighted the concentration of risk among a few providers of “funded reinsurance”. These are reinsurance companies that take on longevity and investment risk from a bulk annuity insurer.
Both the PRA and the Financial Policy Committee have expressed concerns about the growth in the use of funded reinsurance, warning that “if not properly controlled” it could lead to “a rapid buildup of risks in the sector and have the potential to pose systemic risks”.
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Appointments: Isio and LCP target growth with new hires
LCP is seeking to respond to the rapid growth in sole trustee appointments with the appointment of Holly McArthur as head of sole trusteeship.
Meanwhile, Isio is also targeting growth with the appointment of pension risk transfer specialist Karen Gainsford to partner and the hire of Andrew Tunningley as head of growth projects.
There are also new faces at Aon , Royal London and The Law Debenture Group .
National Wealth Fund chief to speak at UK Investment Summit
John Flint, chief executive of the UK's new National Wealth Fund, will give a keynote address at the UK Investment Summit in London on 27 February.
This exclusive event, hosted at Central Hall in Westminster, will bring together pension funds and investment decision makers from across the public and private sectors to explore the opportunities involved in domestic investment.
It will also focus on government policy to encourage greater UK investment, examining the implications and potential impact of the National Wealth Fund and the new British Growth Partnership investment vehicle to boost the economy and improve outcomes for pension savers.